Core Viewpoint - The average brokerage recommendation (ABR) for Amkor Technology (AMKR) is 1.78, indicating a general suggestion to buy the stock, but reliance solely on this metric may not be advisable due to potential biases in brokerage recommendations [2][3][9]. Brokerage Recommendations - Amkor Technology has an ABR of 1.78, which is between Strong Buy and Buy, based on recommendations from nine brokerage firms [2]. - Out of the nine recommendations, five are Strong Buy and one is Buy, accounting for 55.6% and 11.1% of all recommendations respectively [2]. Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations often do not effectively guide investors towards stocks with the highest potential for price appreciation [3]. - Brokerage firms may exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell recommendations [4][9]. Zacks Rank Comparison - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, making it a more reliable indicator of near-term stock performance compared to ABR [6][10]. - The Zacks Rank is updated more frequently and reflects changes in earnings estimates promptly, unlike the ABR which may not be current [11]. Current Earnings Estimates for Amkor Technology - The Zacks Consensus Estimate for Amkor Technology has declined by 8% over the past month to $1.42, indicating growing pessimism among analysts regarding the company's earnings prospects [12]. - This decline in earnings estimates has resulted in a Zacks Rank of 5 (Strong Sell) for Amkor Technology, suggesting caution despite the Buy-equivalent ABR [13].

Core Viewpoint - Amkor Technology (AMKR) is currently rated as a Zacks Rank 5 (Strong Sell) due to a recent earnings miss and soft guidance, indicating potential challenges in the semiconductor packaging and testing services sector [1]. Company Overview - Amkor Technology, Inc. provides outsourced semiconductor packaging and test services, including design, package characterization, test, and wafer bumping services. The company was founded in 1968 and is headquartered in Tempe, AZ [2]. Earnings History - Over the past year, Amkor Technology has had three earnings beats and one miss against the Zacks Consensus Estimate. The most recent quarter reported earnings of $0.49, missing the consensus estimate of $0.50. This performance alone does not justify a Zacks Rank 1 (Strong Buy) or a Zacks Rank 5 (Strong Sell) [4]. - The company has guided earnings per share (EPS) for the next quarter to a range of $0.28 - $0.44, while the consensus was expecting EPS of $0.55 [4]. Earnings Estimates - Recent trends show a decline in earnings estimates for Amkor Technology. The current fiscal year consensus estimate has decreased from $1.54 to $1.42 over the last 60 days. For the next fiscal year, estimates have dropped from $2.29 to $1.97 during the same period [6]. - The negative movement in earnings estimates is a significant factor contributing to the stock's Zacks Rank of 5 (Strong Sell) [6]. Market Context - It is noteworthy that many stocks within the Zacks universe are experiencing negative earnings estimate revisions, leading to a broader trend of stocks falling to a Zacks Rank 5 (Strong Sell) [7].

Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List due to downward revisions in their earnings estimates Group 1: Company Summaries - A. O. Smith Corporation (AOS) is a water heating and treatment company, with a current year earnings estimate revised downward by 7.1% over the last 60 days [1] - AerSale Corporation (ASLE) is an aerospace aftermarket services provider, with a current year earnings estimate revised downward by 15.4% over the last 60 days [1] - Amkor Technology, Inc. (AMKR) is a semiconductor outsourcing company, with a current year earnings estimate revised downward by 5.2% over the last 60 days [2]

Financial Performance - Net sales increased by $39.8 million, or 2.2%, to $1,861.6 million for the three months ended September 30, 2024, driven by growth in consumer and computing end markets, which rose by 30% and 23%, respectively [97][104]. - Gross margin decreased to 14.6% for the three months ended September 30, 2024, down from 15.5% in the same period of 2023, primarily due to higher material content and overhead costs [98][107]. - Operating income margin decreased by 110 basis points to 8.0% for the three months ended September 30, 2024, attributed to decreased gross margin and increased employee compensation costs [99]. - The automotive and industrial end market saw a 17% decline in net sales for the nine months ended September 30, 2024, primarily due to elevated customer inventories and weaker demand [105]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $551.3 million for the nine months ended September 30, 2024, down from $696.2 million in the same period of 2023, mainly due to changes in working capital [101]. - Capital expenditures totaled $458.1 million for the nine months ended September 30, 2024, a decrease from $511.7 million in the same period of 2023, focusing on advanced packaging and test equipment [100]. - Free cash flow for the nine months ended September 30, 2024, was $105,832, down from $190,701 in the prior year [145]. - Capital expenditures for the nine months ended September 30, 2024, amounted to $458.1 million, with expectations of approximately $750 million for the full year 2024 [138][139]. Debt and Interest - Total debt as of September 30, 2024, was $1,101.6 million, with $207.6 million due within 12 months [128]. - Interest expense increased by 20.2% to $15,622 thousand for the three months ended September 30, 2024, compared to $13,001 thousand for the same period in 2023 [113]. - Interest income rose by 30.7% to $(15,862) thousand for the three months ended September 30, 2024, compared to $(12,137) thousand for the same period in 2023 [114]. - Fixed rate debt totaled $29,834, with an average interest rate of 1.4% [156]. - Variable rate debt amounted to $2,000, with an average interest rate of 5.8% [156]. - Total debt maturities were $31,834 for the nine months ended September 30, 2024 [156]. Foreign Exchange and Investments - Approximately 90% of net sales for the nine months ended September 30, 2024, were denominated in U.S. dollars, with the remaining primarily in Japanese yen [150]. - A 10% appreciation of foreign currencies against the U.S. dollar would have resulted in an estimated $18 million decrease in income before taxes for the nine months ended September 30, 2024 [149]. - The company experienced a loss of $6.0 million due to foreign exchange rate translation for the nine months ended September 30, 2024 [153]. - The company has implemented foreign currency forward contracts to hedge certain net investment positions in foreign subsidiaries starting April 2024 [153]. Research and Development - Research and development expenses decreased by 11.6% to $120.1 million for the nine months ended September 30, 2024, compared to $135.9 million in 2023, due to a shift in asset utilization and projects moving into production [111]. Other Financial Metrics - Income tax expense decreased by 33.7% to $19,185 thousand for the three months ended September 30, 2024, compared to $28,923 thousand for the same period in 2023 [116]. - Cash and cash equivalents, along with short-term investments, totaled $1,471.5 million as of September 30, 2024, with $1,305.5 million held offshore [122]. - The company paid total quarterly cash dividends of $58.2 million during the nine months ended September 30, 2024 [137]. - The maximum borrowing capacity under the 2022 Singapore Revolver was $600.0 million as of September 30, 2024 [127]. - Off-balance sheet purchase obligations for capital expenditures were $368.3 million as of September 30, 2024, with $323.9 million payable within 12 months [135]. Operational Developments - The company began delivering advanced packages from its Vietnam Facility in Q3 2024 and is planning to build an advanced packaging and test facility in Arizona [90]. - The semiconductor industry is currently experiencing a cyclical correction, with historical trends indicating a strong correlation between GDP levels and semiconductor cycles [93]. Internal Controls - There were no changes in internal control over financial reporting that materially affected the company's controls during the quarter ended September 30, 2024 [159].

Core Viewpoint - Amkor Technology (AMKR) reported lower-than-expected earnings for Q3 2024, with a decline in net income and a dismal outlook for Q4 2024, which may negatively impact its stock price [1][5]. Financial Performance - Q3 earnings per share were 49 cents, a 9.3% decline year over year, missing the Zacks Consensus Estimate by one cent [1]. - Revenues for the quarter reached $1.86 billion, exceeding the consensus estimate of $1.83 billion, and reflecting a 2.2% year-over-year increase driven by demand for Advanced SiP technology [2]. - Operating income margin for Q3 was 8%, up 240 basis points sequentially but down 110 basis points from the previous year [8]. - EBITDA for Q3 was $309 million, a 25% increase sequentially but a 7% decline year over year [8]. Market Segmentation - Advanced products accounted for 84.2% of total Q3 revenues, while mainstream products made up 15.8% [6]. - The Communications sector contributed 52% of Q3 revenues, while Automotive and Industrial markets accounted for 16% [7]. - Consumer and Computing markets each generated 16% of revenues [8]. Guidance and Outlook - For Q4 2024, Amkor anticipates revenues between $1.60 billion and $1.70 billion, lower than the Zacks Consensus Estimate of $1.85 billion [10]. - Gross margin for Q4 is expected to be between 13.5% and 15.5%, with net income projected between $70 million and $110 million [11]. Balance Sheet and Cash Flow - As of September 30, 2024, total cash and short-term investments were $1.47 billion, down from $1.55 billion at the end of Q2 [9]. - Long-term debt decreased to $894 million from $949.3 million at the end of Q2 [9]. - Operating cash flow for Q3 was $164.2 million, totaling $551.3 million for the first three quarters of 2024 [9].

Core Insights - Amkor Technology (NASDAQ: AMKR) has shown overall positive performance, particularly in its tech solutions segment, despite mixed financial results in recent quarters [1] Financial Performance - For Q3, Amkor's earnings reflect a mixed performance, indicating variability in financial outcomes [1]

Group 1 - Amkor Technology (NASDAQ: AMKR) provides outsourced semiconductor packaging and testing services, capitalizing on industry megatrends such as 5G, automotive, high-performance computing, and IoT [1] - The company is recognized for its leadership in advanced packaging markets, which is a significant growth area [1] - A recent partnership with TSMC is expected to enhance Amkor's capabilities and market position [1] Group 2 - The investment strategy focuses on identifying companies in niche markets with strong growth potential, solid management, sound capital allocation, and reasonable valuation [1] - The portfolio typically consists of 15-20 stocks, emphasizing diversification, risk management, and disciplined trading [1] - The target annual return for the portfolio is set at 15% [1]

Financial Data and Key Metrics - Q3 2024 revenue was $1.86 billion, a 27% sequential increase, driven by advanced SiP technology [6] - Q3 EPS was $0.49 [6] - Gross profit for Q3 was $272 million, with a gross margin of 14.6%, constrained by higher material content [26] - Operating income increased over 80% sequentially to $149 million, with an operating margin of 8% [27] - Net income for Q3 was $123 million, resulting in EPS of $0.49 [27] - Q3 EBITDA was $309 million, with an EBITDA margin of 16.6% [27] - The company ended the quarter with $1.5 billion in cash and short-term investments, and total liquidity of $2.2 billion [27] - Total debt stood at $1.1 billion, with a debt-to-EBITDA ratio of 1x [28] Business Line Data and Key Metrics - Advanced packaging revenue increased 6% year-to-date over 2023, driven by AI and high-performance computing [8] - Mainstream business revenue declined 24% year-to-date due to weakness in automotive, industrial, and consumer markets [8] - Communications end-market revenue increased 36% sequentially, driven by premium tier smartphone launches [11] - Automotive and industrial revenue remained stable, with a year-to-date decline of 17% [13][14] - Computing end-market revenue increased 6% sequentially and 23% year-on-year, driven by AI devices [15] - Consumer end-market revenue increased 70% sequentially, driven by a new wearable IoT device [17] Market Data and Key Metrics - Demand for AI devices remains strong, with 2024 revenue for 2.5D expected to quadruple versus 2023 [16] - Traditional server and networking business declined 33% year-to-date, with early signs of recovery in Q4 [16] - Automotive and industrial markets are experiencing prolonged weakness, with recovery timing uncertain [14] - The company expects a more-than-seasonal decline in Q4, with revenue guidance of $1.65 billion, primarily due to dynamics in the communications end market [24] Company Strategy and Industry Competition - The company is focused on three strategic pillars: technology leadership in advanced packaging, global manufacturing footprint, and strategic partnerships [9] - Production has started in Vietnam, and plans for the Arizona facility are progressing well, supported by CHIPS funding [10][22] - Strategic partnerships with industry leaders like TSMC and Infineon strengthen the company's position in secular growth markets [10] - The company is diversifying its customer and technology portfolio, particularly in AI and high-performance computing [52] Management Commentary on Operating Environment and Future Outlook - The company expects a gradual recovery in automotive and industrial markets, with modest growth in Q4 and further growth in 2025 [42] - The communications market is expected to decline single-digits for full-year 2024, while automotive and industrial markets are expected to decline double-digits [24] - The company remains confident in long-term growth prospects, supported by its technology portfolio, global manufacturing footprint, and strategic partnerships [25] Other Important Information - The company is investing $750 million in CapEx for 2024, with two-thirds focused on expanding capacity for 2.5D and advanced SiP technologies [33] - The Vietnam facility started production in Q3, with expected volume ramps in Q4 [20] - The company is qualifying next-generation organic RDL interposer solutions for 2025 [20] Q&A Session Summary Question: Capacity additions and underutilization charges [36] - The company is fully utilizing its 2.5D capacity and plans further expansion in 2025 [37] - Underutilization is primarily in automotive and industrial lines, with gradual recovery expected in 2025 [38] - The Vietnam facility is expected to dilute gross margins by 50 basis points in Q3 and 100 basis points in Q4, tapering off in 2025 [40] Question: Automotive market dynamics [41] - The automotive market is stabilizing, with modest growth expected in Q4 and gradual recovery in 2025 [42] Question: Premium tier smartphone build plan and 2025 outlook [45] - Visibility into 2025 is limited, but the company expects a stronger cycle driven by AI functionality in premium tier phones [45] - The $100 million revenue range in Q4 guidance is primarily due to deviations in the phone build plan [46] Question: Business trends in the first half of 2025 [50] - The company expects headwinds in the iOS ecosystem but gradual recovery in Android, automotive, and industrial markets [50] - Computing and consumer markets are expected to show continued growth [50] Question: AI market and customer diversification [51] - The company is diversifying its customer and technology portfolio, with new customers onboarding for 2.5D technology [52] Question: Gross margin outlook for 2025 [55] - Gross margins are expected to improve in 2025 due to recovery in automotive, industrial, and traditional server markets [56] Question: Key growth drivers for 2025 [57] - The company expects growth in AI edge devices, automotive power modules, and continued strength in computing [58] Question: Vietnam and Arizona facility ramp-up [59] - Vietnam is ramping up SiP and memory production, with additional 2.5D capacity expected by mid-2025 [60] - The Arizona facility will run TSMC technology for joint customers, with additional Amkor advanced packaging technology [63] Question: Test business and CapEx for 2025 [64] - The company is pursuing investments in test business, particularly for AI devices [65] - CapEx for 2025 is expected to remain in the low-teens, with continued investment in 2.5D and panel-level packaging [66] Question: iOS phone ramp and substrate issues [68] - The company experienced a deviation in seasonality for iOS and Android phone builds, with a device changeover impacting Q4 [69] Question: Vietnam facility ramp impact on gross margins [70] - The Vietnam facility is expected to impact gross margins by 100 basis points in Q4, tapering off in 2025 [70] Question: Incremental investment in 2.5D capacity [73] - The company plans significant capacity expansion in 2.5D for 2025, similar to the expansion in 2024 [75] Question: HBM shortage and ramp timing [76] - The company experienced some HBM supply constraints in Q3, but overall 2.5D capacity expansion was fully utilized [76] Question: Automotive and industrial market recovery [79] - The automotive market is stabilizing, with inventory correction extending into Q3, but recovery is expected in 2025 [79]

Core Viewpoint - Amkor Technology reported quarterly earnings of $0.49 per share, slightly missing the Zacks Consensus Estimate of $0.50 per share, and down from $0.54 per share a year ago, indicating a -2% earnings surprise [1][2] Financial Performance - The company posted revenues of $1.86 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.55%, and showing an increase from $1.82 billion year-over-year [2] - Over the last four quarters, Amkor Technology has exceeded consensus EPS estimates three times and topped revenue estimates four times [2] Stock Performance - Amkor Technology shares have declined approximately 10.2% since the beginning of the year, contrasting with the S&P 500's gain of 21.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.54 on revenues of $1.85 billion, while for the current fiscal year, the estimate is $1.55 on revenues of $6.51 billion [7] - The trend of estimate revisions for Amkor Technology is mixed, which may change following the recent earnings report [6] Industry Context - The Electronics - Semiconductors industry, to which Amkor belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Net sales for Q3 2024 reached $1.86 billion, a 27% increase sequentially from Q2 2024[1] - Gross profit was $272 million, with a gross margin of 14.6%[2] - Operating income for the quarter was $149 million, representing an operating income margin of 8.0%[2] - Net income attributable to Amkor was $123 million, with earnings per diluted share of $0.49[2] - The company expects Q4 2024 net sales to be between $1.60 billion and $1.70 billion, with a gross margin of 13.5% to 15.5%[4] - Net income for the nine months ended September 30, 2024, was $249,734 thousand, slightly up from $243,119 thousand for the same period in 2023, indicating a year-over-year increase of about 2.7%[18] Sales and Market Segmentation - Advanced products accounted for $1.57 billion in net sales, representing 84% of total sales in Q3 2024[8] - The top ten customers contributed 74% of total net sales in Q3 2024[8] - Communications end market represented 52% of total sales, an increase from 48% in Q2 2024[8] Cash and Investments - Total cash and short-term investments stood at $1.5 billion, while total debt was $1.1 billion as of September 30, 2024[2] - Cash and cash equivalents decreased to $959,140 thousand from $1,119,818 thousand, representing a decline of approximately 14.4%[16] - The company reported a net cash used in investing activities of $501,752 thousand, compared to $696,897 thousand in the previous year, a decrease of approximately 28.0%[18] - The effect of exchange rate fluctuations resulted in a net decrease of $2,868 thousand on cash, cash equivalents, and restricted cash[18] Assets and Liabilities - Total assets increased to $7,029,086 thousand as of September 30, 2024, compared to $6,771,125 thousand at December 31, 2023, reflecting a growth of approximately 3.8%[16] - Total current liabilities rose to $1,572,831 thousand, up from $1,384,475 thousand, marking an increase of about 13.6%[16] - Long-term debt decreased to $893,994 thousand from $1,071,832 thousand, a reduction of approximately 16.6%[16] - Total stockholders' equity increased to $4,197,254 thousand from $3,995,035 thousand, showing a growth of approximately 5.0%[16] Capital Expenditures - Full year 2024 capital expenditures are projected to be approximately $750 million[4] - Capital expenditures payable increased significantly to $210,398 thousand from $106,368 thousand, indicating an increase of about 97.7%[16] Operating Activities - Net cash provided by operating activities for the nine months was $551,260 thousand, down from $696,187 thousand in the prior year, reflecting a decrease of about 20.8%[18]